Power policy

Moldova in 2013 introduced National Energy Strategy targets that include the use of 20% renewables in the country's total final consumption and 10% renewables in electricity generation by 2020. By the end of 2020, the country hadn't met the target. Moldova's law on renewable energy, which took effect in March 2019, specifies the use of tenders to contract renewable energy. However, to date no auction schedule or details have been issued. Moldova's energy regulator issued a feed-in-tariff policy for small-scale renewables projects larger than 10 kilowatts using wind, solar, geothermal, hydro, and combined heat and power that burns biomass or biogas, in March 2020. Renewable Energy producers will receive priority grid access by the transmission system operator. Net metering is available for customers generating up to 100 kilowatts for their own consumption.

While the purchase and installation of renewables is exempt from value added tax (VAT), import duties differ according to the technology and origin. Wind turbines imported to Moldova are subject to duties ranging from 0% from EU countries to 8% for non-EU countries, and solar photovoltaics imported to Moldova are exempt from import duties from all sources. Complementing this, national legislation confirms that if a project is implemented using a financing agreement with an international donor such as a multilateral agency, like the World Bank, the IMF, EBRD or International Development Agencies such as JICA, GIZ, DANIDA, NORAD, and delivers a benefit to Moldova, the project may be exempt from all taxes, which may explain the heightened foreign investment in the country.

Power prices and costs

Moldova’s wholesale electricity market started in 2019 and is based on bilateral contracts. Industrial and commercial retail electricity rates kept declining slightly in 2020 to an average of about 1.8 leu (0.1 euro) per kilowatt-hour, as well as residential customers. The fossil-fueled Kuchurgan power plant, controlled by Russia’s Inter-Rao and located in the breakaway region of Transnistria, has maintained its near-monopoly supply status in Moldova. In October 2021, the power station announced possible halts in power supply as a threat to Moldovan officials who are negotiating a new price for gas in Russia since MoldovaGaz reduced the volume of gas shipped to Kuchurgan.

Power market

Moldova’s transition to clean power auctions is its first step into wholesale markets. Until Moldova’s desired power auctions actually begin, the country will continue to obtain roughly three-quarters of its domestic power from the fossil-fueled Kuchurgan power plant. Power from Kuchurgan or imported from Ukraine constitutes more than 90% of Moldova’s supply. Electricity supplied by Ukraine’s DTEK is sourced from thermal plants that burn coal and could include some power from wind and solar sources.

The Republic of Moldova allows bilateral contracts between distribution companies, unregulated customers, generators and other power supplies. Besides that, licensed suppliers have the right to import and export energy. Renewables generated in Moldova itself contribute a negligible amount to the country’s power supply, with small hydro being the most considerable with 5.28% of Moldova’s power generation. While distribution has been privatized, the rest of the power market is state-controlled and prices are regulated. The Energy Community Regulatory Board reported that there were five retail electricity suppliers active in the retail market, however, each company has a specific region to attend and final consumers can’t choose from whom they buy electricity. There are plans to reform the system, which has six licensed power producers that operate in part under regulated tariffs.

Doing business and barriers

It is legally possible to set up residential and commercial PV in Moldova, and the country’s feed-in tariff allows system owners to sell their surplus generation. Overall power demand is growing slowly, as Moldova remains predominantly agricultural and its economic system contends with the breakaway region of Transnistria, which receives economic support from Russia. The post-Soviet Moldovan energy system requires investment as the grid is outdated technologically and remains unconnected with Western Europe’s. Plans to synchronize the Moldovan grid with the European system are moving forward with the support of European Union (EU). In October 2021, the Moldova Association Council and the EU met again in Brussels to discuss ways out the current gas crisis in Moldova after Gazprom did not renew its long-term gas contract at the end of September. The EU said it will keep giving advice about diversifying energy supply routes, stressing the importance of unbundling the supply and distribution of gas and electricity as a means of increasing Moldova's resilience and their partnership against geopolitical threats.

Moldova has incorporated EU legislation into the national laws and has been quick in adopting targets for renewables and interconnection rules established by the EU. The difficulties lie in implementation, which is hard and slow because of a lack of funding and a largely state-controlled system that does not lend itself easily to modernization or change in general. The country continues to be extraordinarily dependent on electricity from non-market sources, which creates artificially low price competition for renewables technologies. The absence of a forward power market or scheduled power auctions leaves prospective developers with limited visibility on future prices.

EV market

As mentioned before, in the last couple of years Moldova has been aligning more with EU laws and standards. In the EV market, a new fuel-quality law adopted in 2019 aims to eliminate toxic exhaust fumes from the country. Those fuel specifications are in line with the EU fuel-quality directive and are focused on petrol and diesel fuels.

EV policy

EVs have a reduced excise duty rate of 25% to 50% depending on the model. In 2018, Moldova unveiled a project called "Moldova Sustainable Green Cities", implemented by UNDP Moldova and financed by the Global Environment Facility (GEF). The goal was to have 30 charging stations by the end of 2019. In 2020, the UNDP promoted a call of interest for the second phase of this project. Sustainable Green Cities, with a five-year duration (2018-2022), has a total budget of $2.72 million.

Buildings market

Moldova has several regulations on energy efficiency measures and renewable heating. The main regulation is the country’s Energy Efficiency Law from 2018. The National Energy Efficiency Action Plan (NEEAP) was adopted a year later, in 2019. According to both documents, several sub-laws were adopted, such as the program for the renovation of buildings owned and occupied by central government authorities. Besides that, progress in the Buildings Directive includes a national methodology for minimum energy performance of buildings.

Buildings policy

Moldova’s renewable energy policies are generally impelled by international development institutions’ incentives. In the case of building policies, foreign investors would help in the process of ensuring district heat system are functional. Some 11% of the heating system in the country was using this technology in 2019. The goal is to reduce energy losses through renovation work.